He no longer wants to live with us so he is breaking his lease.
He has signed a sub tenet agreement
He thinks he should get half of his deposit even though we have to find someone to live in the room.
When you have a sub-tenant, then YOU are a landlord. As his landlord, you have a duty to deal with his security deposit in exactly the same way as any other landlord. If you screw it up, you could be held liable for three times the amount of the deposit plus attorney fees.
You don't have to return the deposit when the tenant moves out. You have at least 30 days to determine what to do with the deposit.
If you collected a security deposit, then you must provide your tenant with a written accounting of the deposit within 30-60 days (depending on what your lease says) after he returns possession of the property to you. If you fail to do so, then you must return the ENTIRE deposit regardless of anything he owes you.
If the sub-tenant agreement was terminated early without authorization in the agreement, then you have a duty to mitigate your damages. You have to take reasonable steps to find a replacement tenant. If you take reasonable steps, then you can deduct from the deposit rent you lose between the time your old tenant stops paying you and your new tenant moves in. If you are owed more than the amount of the deposit, you can sue the tenant for the different. However, remember that you still have to provide a written accounting outlining the amount you are withholding within the appropriate time frame.
You will find the procedures for eviction in this reports:
A good place to start, even if you don’t live in Denver, for answers to questions about landlord/tenant issues is the City of Denver Residential Landlord Tenant Guide and the guide to Renter Rights and Responsibilities published by the Apartment Association of Metro Denver, part of the Colorado Apartment Association. There is no charge for these publications. Neither is a substitute for advice from an attorney.
I have practiced law for over 40 years and currently reside in Colorado. I am licensed to practice in Texas and Colorado. For the most part, I practice in the area of estate planning, which includes drafting wills and powers of attorney, guardianships, probate, real estate, and related issues. My response to your question does not create an attorney-client relationship with me or any attorney. My response is based on the information provided.
I agree with Mr. Harkess's answer as to the legal technicalities regarding how you withhold a security deposit against the tenant's wishes.
As a practical matter, if I were you, and if I was not used to being a landlord with all the responsibilities that may include, and if I was living in the Denver/Aurora area where last I heard the rental market is relatively tight and probably relatively easy to find someone to rent the room, I would probably accept the tenant's offer of 1/2 deposit (get it in writing signed by the tenant that he offered that in exchange for getting out of the lease early) and quickly go find a replacement roommate. That would avoid the hassle and stress of worrying about whether I followed all the right procedures for withholding his security deposit.
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